The amendment of the Nigeria LNG Limited (NLNG) Act (Fiscal, Guarantees, Assurances, and Incentives) by the House of Representatives on May 9, 2017 will subject the company to more than just the 3% Niger Delta Development Commission (NDDC) levy due to the removal of the Guarantees and Assurances in the Act.
This position was made known by Dr Kudo Eresia-Eke, General Manager, External Relations, Nigeria LNG Limited on national television in Abuja recently. In a statement by the company, Eresia-Eke said, “The complete removal is a huge error and it is inimical to the growth of Nigeria and a direct collision with the Federal Government’s drive to attract Foreign Direct Investment (FDI).’
‘The main thrust of the Guarantees and Assurances were to assure the foreign Investors that their investments would be protected by the non-amendment of the NLNG Act.’ Eresia-Eke added.
Owned by four shareholders, namely the Federal Government of Nigeria, represented by Nigerian National Petroleum Corporation (49%), Shell (25.6%), Total LNG Nigeria Ltd (15%) and Eni (10.4%), Nigeria LNG Limited commenced operations in May 1999, three weeks after the enactment of the NLNG Act after over 30 years of unsuccessful efforts by successive Nigerian administrations to attract foreign investors to the LNG sector.
From an initial investment of US$6.0billion, the Company now has an asset base of over $11billion, generated over $90 billion in revenues, grown from one to a six-train operation, with a nameplate capacity of 22 million tonnes per annum (mtpa). NLNG is also on the verge of achieving a seventh and eighttrains to bring the production capacity to approximately 30 mtpa.
An amendment of the Act will obviously breach the promises by Government to its co-investors thereby damaging the reputation of the country, its credit rating, and ability to attract or even retain future investments.
Remarking on the impact of the amendment, Eresia-Eke stated that the amendment will also mean an immediate potential loss of foreign investment of US$25 billion in respect of Trains 7 and 8 investments (US$15 billion by the gas producing and supplying companies [Upstream], and US$10 billion for construction of the project).